Diversion of IOLA Funds Will Degrade Access to Justice

The New York Legal Profession – from Managing Partners of Global Law Firms to Solo Practitioners – Joins Nonprofits, Legal Services Groups, Social Services Agencies, Veterans Groups and Concerned Citizens in Urging New York’s Governor to Reverse Course

A wide range of groups and individuals are calling on Governor Kathy Hochul to scrap her plan to divert $100 million from New York’s Interest on Lawyer Account (IOLA) Fund to the General Budget, warning that depleting the fund will have severe effects on access to justice and the state’s economy.

Since 1984, in accordance with New York law, the interest earned on lawyer trust accounts has been used exclusively to provide critical legal services to indigent persons in New York, as it does in every other state. In just the last year, scores of nonprofit legal services organizations across New York State that received IOLA grants closed over 300,000 cases benefiting over 600,000 New Yorkers and generating over $3.5 billion dollars of economic benefit to New York. Food security, shelter, jobs, health care and other life necessities would be at risk if these non-taxpayer, IOLA funds were to be diverted.

“Lawyers across New York recognize, trust and expect that their use of IOLA escrow accounts will result in contributions to legal services for those in need, at a time when up to an additional $1 billion is required to close the justice gap in the state,” said New York City Bar Association President Susan J. Kohlmann.

“The risk of the governor’s proposed ‘IOLA Sweep’ for IOLA-funded organizations like the City Bar Justice Center and 80 other IOLA grantees across New York State is a deeply human one, because it risks unsettling longstanding services that provide those essentials of life to our neighbors who cannot afford legal help,” said City Bar Justice Center Executive Director Kurt M. Denk.

A letter to Governor Hochul signed by leaders of large law firms and corporate legal departments in New York states, “The pro bono work done by attorneys at law firms, solo practices, and corporate law departments relies on the identification and screening of clients and the expertise provided by public interest lawyers at IOLA grantees. Any loss of IOLA funding by the grantees would result not only in reduced services by the legal services providers, but also in a significant decrease in the amount of pro bono work that our lawyers will be able to provide.”

A separate letter, organized by the City Bar, with more than 250 400 signatures [updated on 2/15/24] from law firm leaders, managing partners, pro bono professionals, in-house counsel, bar association leaders, small and midsize law firm lawyers, solo practitioners, and nonprofit and legal services lawyers states, “[T]he potential ethical uncertainty that diversion of IOLA funds may occasion could lead members of our profession to question whether they should use IOLA accounts at all, creating an existential threat to a primary funding stream for civil legal services in New York.”

For a short explainer on this issue, listen to this podcast with Christopher B. O’Malley, Executive Director of the IOLA Fund of the State of New York, and Kurt M. Denk, Executive Director of the City Bar Justice Center.  

Among the scores of groups on record in opposing the sweeping of IOLA funds into the general fund are Advocates for Children of New York,  Center for Elder Law & Justice, City Bar Justice Center, Empire Justice Center, Equal Justice Works, Erie County Bar Association Volunteer Lawyers Project, Fund for Modern Courts, Her Justice, Hudson Valley Justice Center, Justice in Aging, Legal Aid Bureau of Buffalo, Legal Services of Central New York, Long Island Advocacy Center, Monroe County Bar Association, New York City Bar Association, New York Lawyers for the Public Interest, New York Legal Assistance Group, New York Legal Services Coalition, New York State Bar Association, Network of Bar Leaders, New York County Lawyers Association, Oneida County Bar Association, The Legal Aid Society of Mid-New York, The Legal Aid Society of Rochester, the New York Community Trust, United Way of Greater Rochester and the Finger Lakes, and the Volunteer Lawyers Project of Central New York.

Following are links to some of the statements opposing the sweeping of IOLA funds into the general budget:

IOLA Letter to Governor Hochul

IOLA Board Statement

Community Letter of 170+ signatories represent leading social service agencies, veterans groups, health care providers, legal organizations, and concerned citizens from across the state

Letter to Governor Hochul from leaders of large law firms and corporate legal departments in New York

Lawyers’ Letter of Concern, organized by the City Bar, with 250+ signatures (as of 2.12.24) 400 signatures [updated on 2/15/24] from law firm leaders, managing partners, pro bono professionals, in-house counsel, bar association leaders, small and midsize law firm lawyers, solo practitioners, and nonprofit and legal services lawyers.
The letter’s organizers will continue to collect signatures, as necessary.

NY Legal Services Coalition Testimony

Network of Bar Leaders Statement

Empire Justice Center Testimony

Volunteer Lawyers Project of Central New York Testimony

City Bar Justice Center Statement and Testimony

New York City Bar Association Statement

New York State Bar Association Statement

New York County Lawyers Association Statement